Business Maverick: Spot Gold’s Rally to $1,800 Sees ETFs Topping Full-Year Record

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Gold’s allure in 2020 continues to strengthen, with spot prices surpassing $1,800 an ounce and inflows into bullion-backed ETFs already topping the record full-year total set in 2009.

Investors have favored havens this year as the coronavirus pandemic rips through economies. That’s spurred sustained inflows into gold-backed exchange-traded funds as central banks and governments unleash vast stimulus programs.

“A massive investor response to Covid-19 has pushed ETF holdings to record levels, the impact of which has outweighed the decline in jewelry demand and absorbed increases in recycling,” James Steel, chief precious metals analyst at HSBC Securities Inc., said in a note. Further inflows are expected “as investors respond to elevated risks and low yields.”

Holdings in gold-backed ETFs increased to 3,234.6 tons on Tuesday, according to initial data compiled by Bloomberg. That’s up 655.6 tons so far in 2020, topping the tonnage increase seen in 2009. The total has climbed every month this year.between the U.S. and China, and a weakening U.S. dollar. Spot gold rose as much as 1.3% to $1,818.02 an ounce, the highest intraday since September 2011, and traded at $1,811.67 as of 1:48 p.m. in New York. Spot silver touched $18.7741 an ounce, the highest in more than four months.

“Now that the break has occurred we’re probably seeing fresh buying coming in from traders who’ve been sitting on the fence,” Ole Hansen, head of commodity strategy at Saxo Bank A/S, said about gold in a phone interview.

 

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